The “no tax on overtime” deduction is causing confusion among millions of taxpayers in 2026. Many claims may be incorrect due to unclear rules, leading to possible IRS adjustments, delays, or future audits.

Starting January 1, 2026, the IRS will limit how much of your gambling losses you can deduct. Instead of writing off 100%, you’ll only be able to deduct 90% of what you win. That means you could owe taxes—even if you broke even. Here’s what this “phantom income” rule means and how to prepare for it.